HLG - Hallenstein Glasson

[winner69]

In NZ this year they don't appear to 'taken' anywhere as much in corporate welfare as last year (MOH employer website search)

No idea about Australia

[Beagle]

I'm not really worried about it either way to be honest mate as I'm not really focused on the short term with this one. Clearly the real excitement in the years to come is international growth and the market is not pricing this into the stock at present, in my opinion. I'm fine with that as I wouldn't mind trying to nick some more at (just under $7 please Santa).

[BlackPeter]

I'm not really worried about it either way to be honest mate as I'm not really focused on the short term with this one. Clearly the real excitement in the years to come is international growth and the market is not pricing this into the stock at present, in my opinion. I'm fine with that as I wouldn't mind trying to nick some more at (just under $7 please Santa).

Just curious - what moat do you see for HLG on the international stage? What do they have which other international rag retailers don't?

[Beagle]

Just curious - what moat do you see for HLG on the international stage? What do they have which other international rag retailers don't?

Nobody has a moat in the apparel trade but they have their own niche. Looking at the way they've grown in Australia its clear as a brand Glassons is gaining real traction with Australian women. Australia has always been a tough market for N.Z. companies to crack but its clear that Australian women are really embracing the value and style that Glassons offer. The market there is more than 5 times the size here yet the retail footprint there is only about the same as here. The potential is clear to me and they now have a proven multi year track record of very strong growth over there. What I know about women's fashion could fit on the back of a postage stamp but its clear the team at Glassons are firing on all cylinders.

[BlackPeter]

Nobody has a moat in the apparel trade but they have their own niche. Looking at the way they've grown in Australia its clear as a brand Glassons is gaining real traction with Australian women. Australia has always been a tough market for N.Z. companies to crack but its clear that Australian women are really embracing the value and style that Glassons offer. The market there is more than 5 times the size here yet the retail footprint there is only about the same as here. The potential is clear to me and they now have a proven multi year track record of very strong growth over there. What I know about women's fashion could fit on the back of a postage stamp but its clear the team at Glassons are firing on all cylinders.

Fair enough ... while I am myself not particularly drawn to buy my stuff with Hallensteins, I remember their AGM (I think a couple of year ago) and the Leadership team was young (i.e. probably well tuned into their demographics) and came across as pretty switched on.

On the other hand ... clothing retail is a cyclical business - and while I realize that HLG is around for a long time, they had their ups and downs as well.

Anyway - good luck ... and certainly a case of making hay while the sun shines :

[winner69]

If Glassons AU maintain its sales growth trajectory sales in F23 will be over $200m

That would generate about $50m gross margin than in F21 and lead to another $15m over F21 levels

Even if teh rest of the group goes nowhere HLG group profit will be over $50m in F23

Seems on the cards I reckon .... EPS more than 80 cents ....I leave it to Beagle and his yield calculator what divie we can expect

Balance says a $10 share ..... that's even cheap on where they will likely be in F23

[Rawz]

Why has NZ sales stalled?
Will this happen to Aus?

[Beagle]

FY16 $13.7m
FY17 $17.3m
FY18 $27.3m
FY19 $29.0m
FY20 $27.8m (Covid affected)
FY21 $33.3m (Covid affected)

Overlay that with considerations of sales growth with Glassons Aust and what I see is a trend with a CAGR of just over 19% per annum, not a cyclical company. I'm not pretending for one minute there won't be challenges along the journey but as Winner has alluded too above I'm really excited about what the next 5 years will bring.

Rawz - I would say our market is already well served. HLG are not looking to expand their retail footprint here whereas in Australia for about the same number of Glassons stores as here they are smashing the ball out of the park and there's heaps of room to grow with a total dressable market of more that 5 times N.Z.

[winner69]

Why has NZ sales stalled?
Will this happen to Aus?

From Stats NZ Retail Trade data - If the Clothing and Footwear sector is a proxy for market size then HLG NZ sales are struggling to keep up with market growth. In other words losing share. Glassons are winning share sightly / Hallensteins losing share.

HLG sales in NZ have grown at 4.2% pa while market growth has been 5.0%

NZ consistently generates $16m/$18m of profit .... thats pretty good and then add on the strongly increasing Glassons profit and the Group is
powering ahead

And you never know NZ might come right big time --- the $50m profit in F23 could be $60m
t

[Beagle]

All this growth with the same (just 59.6m) shares on issue year after year after year after...
eps and dividends per share could be "very interesting" in 5 years time